9 million borrowing to pay for essentials

Guest Article

Nine million people – 18% of the adult UK population – borrowed money to pay for essentials in July, according to research from Debt Advisory Centre.

The research shows that Britons used credit to pay for food, for utility bills and even to make repayments on other debts during what can be one of the most expensive periods of the year for families – the summer school holiday.

Worryingly, 3% of those questioned, equivalent to 1.5 million adults in the UK population, paid their mortgage or rent by borrowing – for example, taking out a loan or using a credit card cash advance. A further 5% used borrowed money to pay a gas, electricity or water bill, 4% borrowed to make payments on existing debts, while 6% used credit to pay for food.

The findings do raise the question of how well some people will manage their once-a-month Universal Credit payment – and the impact this could have on them meeting their essential outgoings.

Young adults between the ages of 25 and 34 seem to be struggling more than other age groups. In this group, 7% borrowed to pay their mortgage or rent, 8% used a loan or credit card to pay their utility bills, and 11% went into debt to buy food.

This group was also the most likely to borrow to pay off other debt, with 7% doing so to keep up with repayments on earlier borrowing.

The survey shows that despite signs of recovery in the economy, many people are still left struggling to get by from month to month.

Although many people will need to borrow money from time to time, borrowing to cover essential costs can be a sign of serious financial problems which could get even worse once interest rates begin to rise.

Borrowing money to cover the monthly mortgage payment or rent is particularly serious, as it is arguably the biggest priority for most people.

For those that get help with their rent, Universal Credit replaces housing benefit. This means that money for rent will go straight to the benefits claimant rather than the landlord. If this is spent on other things, it could lead to the claimant losing his or her home.

People who are unable to pay their mortgage or rent would be well advised to get in touch with their mortgage provider or landlord to explain the situation. If that doesn’t help, it may be time to seek expert advice.

Regionally, a greater proportion of people living in London are borrowing to pay for essentials than elsewhere in the country, with 7% taking out credit to meet mortgage and rent payments, 8% to pay gas, electricity and water bills, and 6% borrowing to meet repayments on other debts.

But although fewer people borrowed to meet mortgage, rent and debt payments in the East Midlands, 10% borrowed to pay their utility bills – the highest percentage in the UK.



  1. ANM says:

    This research lends weight to suspicions that the UK is still miles from coming clean on its poor lending legacy, i.e. by writing off debts which are being merely serviced and have no realistic prospect of being paid back. In fact, many banks/credit card co’s have simply passed the buck for their appalling lending decisions by “selling” these debts to others for a few pence in the pound. The new debt owners have an interest in keeping repayments going to make a profit on that debt. Consequently, tens of thousands of households still labour under borrowing approved in the irresponsible boom times. Few make any headway and, by the time they have serviced the minimum payment each month, they have to borrow to make ends meet. It’s a cycle from which they have no realistic prospect of escaping and which will probably only be brought to an end by a rise in interest rates which tips them over the dge. It’s an awful, miserable existence. It is also emphatically NOT an existence in which the welfare budget should play any role which allows it to continue, e.g. via emergency payments, etc. These desperate people need help – someone to champion their cause and negotiate an orderly, managed default on their behalf. The banks aren’t going to do it; understandably, most of those affected will not willingly approach the private sector to do it. CABs do not have the resources. I think it’s something that RSLs and LAs really have to give thought to, if they want to improve the stability of their tenants and citizens’ lives by bringing the cycle of “in debt and in poverty” to an end. Instead of a repayment plan for arrears of rent or CT, which take priority over other debts, a more coherent plan to write off these other debts is needed. How much does it cost to evict someone, or take them to court for non-payment? Far better to use resources to fix their problems by some proactive cleaning and clearing of their debts.

  2. suzan says:

    I made a claim on the 3rd Sept 15 was told I would receive payment 19th October.
    I made arrangements with my landlord to pay my rent then which would put me in arrears.Now its the 19th no payment .Spoke to UC the man was so rude to me said I wont get a payment till 26th Oct which means I’ve will have had to wait nearly 8wks for a payment.They state a payment is due within 6wks.This means I will be 2 mths in arrears with my rent I’ve no gas no food and 50p left on my electric.He was not very helpful and made me feel like I was a scrounger.I’ve worked all my life .He said because I still had an open claim from when I was made redundant it rolls on from that date.My last payment from them was 26th June then I was not entitled because I was earning to much.


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